Repossessions up 70% and 1 in 5 homeowners forced to sell due to mortgage woes

21 November 2008 / by Rachael Stiles
One in five of the homes on the market are there because their owners are unable to keep up with mortgage repayments, while repossession figures are up 70 per cent on last year according to research from the Council of Mortgage Lenders.

"Forced downsizers" – those who have no choice but to put their house up for sale because they can't afford the higher mortgage costs – now account for 5,000 properties going on the market each week, The Times has found from a survey carried out on its behalf by the National Association of Estate Agents.

Estate agents said that at least 20 per cent of their customers were homeowners struggling to pay their mortgage, while one in five estate agents said that these properties account for half of those they currently have on display in their windows.

The Council of Mortgage Lenders (CML) has found that 1.44 per cent of mortgages were at least three months in arrears at the end of September, up 1.33 per cent compared to June's figures.

The number of mortgage customers in arrears at the end of September was 168,000, eight per cent more than the 155,600 who were behind on their payments by three months at the end of June.

The CML expects its previous forecast of 170,000 households being in arrears by the end of 2008 will be exceeded, an average of more than 130 homes a day, but says that its October 2007 forecast of around 45,000 repossessions in 2008 remains accurate.

In the third quarter of 2008, 0.1 per cent of all mortgages were repossessed, only a slight increase from 0.09 per cent in the second quarter, but this equates to a 12 per cent rise in the number of repossessions, up to 11,300 compared to 10,100 in the previous quarter.

The buy-to-let mortgage market, previously displaying better performance than the overall market in terms of repayments figures, deteriorated more rapidly in the third quarter than the wider mortgage market, as a surplus of properties push rents down, making it difficult for landlords to keep up with mortgage borrowing commitments.

Buy-to-let landlords are also facing difficult selling conditions in line with the rest of the market, as mortgage lenders tighten their lending criteria, making it difficult to enter or leave the market.

"The CML and lenders are absolutely committed to ensuring that repossession is only ever a last resort." said CML director general Michael Coogan. "Most borrowers who face payment problems successfully keep their home by working with their lender - anyone worried about mortgage payments should contact their lender at the earliest opportunity, before arrears start to build up."

"Looking ahead, conditions in the wider economy suggest a worsening picture for mortgage arrears," he continued, "however carefully lenders handle their treatment of borrowers in difficulty. But while lenders cannot change the underlying causes of financial difficulty, such as unemployment, they can make sure that their response to borrowers is constructive and seeks to avoid repossession wherever other solutions can be found."

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